Assume that interest rate parity holds. The Mexican interest rate is 50 percent, and the U.S. interest rate is 8 percent. Subsequently, the U.S. interest rate decreases to 7 percent. According to interest rate parity, the peso's forward ____ will ____.​ a. ​premium; increase b. ​discount; decrease c. ​discount; increase d. ​premium; decrease show he the steps how and wh

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Assume that interest rate parity holds. The Mexican interest rate is 50 percent, and the U.S. interest rate is 8 percent. Subsequently, the U.S. interest rate decreases to 7 percent. According to interest rate parity, the peso's forward ____ will ____.​

 

a. 

​premium; increase

 

b. 

​discount; decrease

 

c. 

​discount; increase

 

d. 

​premium; decrease

 

show he the steps how and why

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